Brent eases as trade talks drag, Chinas economy shows weakness

Brent oil fell while U.S. crude futures steadied on Thursday as U.S.-China trade tensions persisted, both Chinese and Indian economies showed signs of slowing and news of surging U.S. production undermined OPEC-led output curbs.

Global benchmark Brent crude futures for April were down 38 cents, or 0.6 percent, at $66.01 a barrel by 1:18 p.m. EST (1818 GMT), ahead of expiry. The more active May Brent contract fell 27 cents, or 0.4 percent, to $66.31.

U.S. West Texas Intermediate (WTI) crude for April delivery rose 15 cents, or 0.3 percent, to $57.09.

Factory activity in China, the world`s biggest oil importer, shrank for a third month in February as export orders fell at the fastest pace since the financial crisis a decade ago.

India`s economy lost momentum in the final quarter of 2018, reducing the annual rate of growth to 6.6 percent, the slowest pace in five quarters and much less than expected.

"The energy complex will require major assistance from a renewed up-trend in the equities and/or some sustainable weakening in the U.S. dollar if WTI is able to lift much above the $58 mark," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

A Reuters survey of 36 economists and analysts indicated growing pessimism about prospects for a significant price rally this year, forecasting Brent would average $66.44 in 2019, slightly lower than the January forecast.

"In the short-term, oil markets are going to be characterised by supply tightness on international markets," said Emirates NBD`s Edward Bell. "Over the rest of 2019, though, the rising oil price sits incongruously with slowing economic growth in major markets."

The United States is working to hammer out a detailed trade agreement with China that will include specific structural commitments, U.S. Treasury Secretary Steven Mnuchin told CNBC in an interview from London, citing progress in recent talks and hopes for the weeks ahead.

Earlier, U.S. Trade Representative Robert Lighthizer dampened expectations of a swift resolution to the dispute. He said issues were "too serious" to be resolved merely with promises from Beijing to purchase more U.S. goods.

Crude prices have also been dragged by news that U.S. oil production surged more than 2 million barrels per day (bpd) in the past year to a record 12.1 million bpd last week.

Prices have been supported since January by supply cuts from the Organization of the Petroleum Exporting Countries and allies such as Russia - a group known as OPEC .

"You`ve got a tug of war between the bullish sentiment from OPEC cuts where they are actually sticking to it versus U.S. shale production," said Darrell Fletcher, senior managing director of commodities at Huntington Bank.

"I do think in the past week or two, the upper hand has gone to the bullish side because of the numbers coming in from the production cuts."

U.S. imports from Saudi Arabia and Venezuela to the U.S. have dropped sharply, helping to draw down U.S. commercial crude inventories by 8.6 million barrels last week, government data showed on Wednesday.

Russian Energy Minister Alexander Novak and his Saudi counterpart Khalid al-Falih discussed in a phone call bilateral cooperation in the energy sphere, Russia`s energy ministry said in a statement on Thursday, without elaborating.(For a graphic on U.S. oil output & storage levels, click here https://tmsnrt.rs/2VegNR3)

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)